J a n u a r y - D e c e m b e r 2 0 1 6 R e s u l t s Gamesa An extraordinary year 23 February 2017 1 1 January-December 2016 Results
Contents 1. Period highlights 2. January-December 2016 Results and KPIs 3. Outlook 4. Conclusions 2 2 January-December 2016 Results
01 Period highlights 3 3 January-December 2016 Results
Guidance was exceeded and the foundations of the long-term strategy were strengthened Record order intake and installations 4.7 GW 1 in 2016 and 1.4 GW 1 in Q4 16 in order intake 4.3 GW installed in 2016: number 4 in the global ranking of the WTG manufacturing sector 2 Focus on value creation led to results exceeding the twice upgraded guidance: ROCE: 30% Through profitable growth and control of the operating break-even point +32% y/y in revenues FY16: € 4.612bn +48% y/y in EBIT FY 16: € 477mn; EBIT margin: 10.4% in 2016 +77% y/y in net profit: € 301mn in FY 16 focused investment (working capital and capex), - € 225mn in working capital at 31 December: -4.9% of revenues + € 211mn in capex FY 16: 4.6% of revenues and a sound balance sheet € 682mn in net cash at 2016 year-end € 423mn in net free cash flow in the year Solid foundations for the long-term value-creation strategy: merger agreement with Siemens Wind Power and approval by Gamesa shareholders 1. Firm orders and confirmation of framework agreements for delivery in the current and subsequent years, including 731 MW signed in Q4 16 and announced in Q1 17. 2. Source: Bloomberg New Energy Finance and FTI Consulting (preliminary). It includes the onshore and offshore market. 4 4 January-December 2016 Results
Record order intake Order intake: 1.4 GW 1 in Q4 16, +33% y/y, and 4.7 GW in FY 16, +21% y/y. Order book: 3.6 GW, +11% y/y Strong commercial performance (MW) 1 Order intake in the last twelve months (MW) 1 +804 MW 4,687 +568 MW 3,637 3,853 3,990 3,883 4,097 4,259 4,343 +21% +11% 4,687 3,315 3,883 3,045 3,552 3,197 2,366 2,555 1.1x 1.3x 1.2x +33% 3,135 2,685 1,386 1,042 Order intake Q4 Order intake 12M Oder backlog @Dec 16 Q1 14 H1 14 9M 14 FY14 Q1 15 H1 15 9M 15 FY15 Q1 16 H1 16 9M 16 FY16 2015 2016 Change y/y Ratio of order intake to sales (MWe) in the period (book- Order book for activity in the current year (in Dec15 backlog, orders to-bill) for 2016) High visibility on projected growth in 2017 Record order intake in Q4 and FY 16 Order book for activity in the current year: +17% vs. orders in at Book-to-bill ratio LTM: 1.1x end-2016 vs. end-2015 Book-to-bill ratio Q4: 1.3x (vs. 1,2x in Q4 15) 63% coverage 2 of volume guidance for 2017 (c.5,000 MWe) 1. Firm orders and confirmation of framework agreements for delivery in the current and subsequent years (including 731 MW signed in Q4 16 and announced in Q1 17). 2. Coverage based on total order intake through 31 December 2016 for activity in 2017 with respect to volume guidance for 2017 @ Feb. 17: c.5,000 MWe. 5 5 January-December 2016 Results
With a diversified regional mix and fast penetration of new product platforms Product breakdown of order intake (%) 1 Geographical breakdown of order intake in 2014-16 (%) 1 100% 90% 2014 2015 2016 80% >70% 70% 60% Other 50% 50% 4.7 GW 3.3 GW 3.9 GW 40% New platforms 30% 20% 20% 10% 0% Q1 15 6M 15 9M 15 FY 15 Q1 16 6M 16 9M 16 FY 16 % OI from new product portfolio as % of total G114-2.0 MW, G114-2.5 MW and G126-2.5 MW: 67% of orders Orders from 21 countries in 2016 (vs. 50% in 2015) USA and APAC, followed by India and Europe & RoW, were the First order for the G132-3.465 MW (198 MW in Mexico) drivers of order intake growth in 2016 Diversification within Latin America made it possible to offset the weak macro situation in Brazil with strong performance in Mexico 1. Firm orders and confirmation of framework agreements for delivery in the current and subsequent years (including 731 MW signed in Q4 16 and announced in Q1 17. 6 6 January-December 2016 Results
Result of the product portfolio competitiveness BP15-17 product portfolio strategy fulfilled: leadership in the mainstream 2 MW segment – G126-2.5 MW wins the gold medal in the category-, and entry in the >3 MW nominal power category with a 198 MW contract Wider range of nominal power >4.0 MW 2.0 MW 1 2.5 MW 1 3.3 MW 1 2015-17E Rotors G132-3.3 MW G126-2.5 MW G132-5.0 MW G97-2.0 MW >100 m G114-2.0 MW G114-2.5 MW G106-2.5 MW Improved CoE 2 : Annual energy production increase between 20% and 35% vs. previous platforms G126-2.5 MW: benchmark in return for low-wind sites G132-3.3 MW: optimum CoE 2 for sites with medium winds Superior reliability Optimum CoE • Intelligent evolution Versatility • • • 1. Each category is available also in the following nominal power categories: 2.0MW 2.1MW, 2.5MW 2.625MW, 3.3MW 3.3465MW 2. CoE: cost of energy 7 7 January-December 2016 Results
Which places Gamesa in position number 4 in the global market ranking Gamesa increases its annual installations (MW) by 27% y/y or 900 MW, moving one position up in the global ranking, to number 4, and gaining market share Global market (onshore and offshore) Global market (onshore and offshore) 2016 Ranking OEM Market share 2016 Ranking OEM 1 Vestas 1 Vestas 2 GE 2 GE 3 Goldwind 3 Goldwind 4 Gamesa 7% 4 Gamesa +2% +1 5 Enercon 5 Enercon Source: Bloomberg New Energy Finance Source: FTI Consulting (preliminary data) Year-on- year variation This growth takes place in a slightly declining market:-1GW y/y 1 in annual installations, ex-China in 2016 1. According to preliminary data published by GWEC on February 10, 2017, annual installations in 2016 amounted to 54,600 MW of which 23,328 MW were installed in China and 31,272 MW were installed in the rest of the world. In 2015, according to data published by GWEC on February 10, 2016, annual installations amounted to 63,013 MW of which 30,500 MW were installed in China and 32.513 MW were installed in the rest of the world. 8 8 January-December 2016 Results
Sales growth +32% y/y in 2016 and +31% y/y in Q4 16 supported by strong growth in wind turbine sales Sales trend year-on-year Group revenues ( € mn) WTG sales ( € mn) WTG activity (MWe) 4,141 4,612 4,332 +32% +37% +36% 3,504 3,033 3,180 +31% +35% +22% 1,145 1,273 1,076 845 971 880 12M Q4 12M Q4 12M Q4 2015 2016 2015 2016 2015 2016 Change y/y FY 16 sales at constant exchange rates 1 rose 38% y/y vs. 32% in real terms, reflecting a 6-point negative currency impact on sales growth 1. At the FY 2015 average exchange rates. 9 9 January-December 2016 Results
Control of structural expenses The operating break-even point is maintained as a key area of management focus: 7% structural expenses 1 / revenues Revenues and structural expenses 1 ( € mn) 4,612 3,504 Goal of BP2015-17E: 2,846 structural expenses 1 / revenues <8% in 2017 9.4% -1.6 p.p. 7.8% -0.7 p.p. 7.0% 2 325 273 268 12M 14 12M 15 12M 16 Sales Structural expenses Structural expenses/revenues in the period Investing in the structure required to expand in 2017 1. Structural expenses with a cash impact (excluding D&A). 2. Structural expenses excluding € 5.3mn in expenses relating solely to the merger. 10 10 January-December 2016 Results
Improving operating and net profit margins EBIT increased by 48% y/y in 2016 (57% y/y in Q4 16), and net profit increased by 77% y/y. EBIT margin in FY 16 was over 10% of revenues: +1,1 p.p. higher than the 2015 margin EBIT ( € mn) Net profit ( € mn) Rising sales 477 +48% Ongoing optimisation of variable 10.4% expenses 301 323 1.8x Strict control of structural +57% +1.1 p.p. 137 170 expenses 2.2x 9.2% 10.8% 95 87 Non-material currency impact 44 9.0% (<0.1%) +1.8 p.p. 12 M Q4 12 M Q4 2015 2016 2015 2016 Change y/y (%) Change y/y (times) EBIT margin % 11 11 January-December 2016 Results
Five-year record net free cash flow € 423mn, 2.3 times the 2015 figure Net free cash flow ( € mn) Control of Modular Net free cash Through capex: Gross operating cash flow: € 469mn working capital flow 1 € 237mn € 211mn € 423mn Profitable growth: € 469mn gross operating cash flow (vs. € 300mn in 2015) Strict control of working capital (WC): - € 225mn @ Dec. 2016 vs. 423 + € 12mn @ Dec. 2015 301 Ratio over revenues: -4.9% € 237mn contribution to cash flow NP 2016 D&A provisions - P&L Consumptions Results from Working Cap. Capex Other provisions Net Free Cash provisions - associates Flow 2016 Warranty Modular capex: € 211mn Change Warranty & others charge Ratio over revenues: 4.6% Net free cash flow of € 423mn (vs. € 182mn in 2015) Net cash on the balance sheet at 31 Dec. 2016: € 682mn 1. Net cash pre-dividend 12 12 January-December 2016 Results
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